The tumble in crude oil prices have been well received by several experts, analysts, companies and government as lower crude oil prices will put lesser burden on India’s crude oil import bill.

New Delhi: The tumble in crude oil prices have been well received by several experts, analysts, companies and government as lower crude oil prices will put less burden on India’s crude oil import bill. Notably, India imports as much as 80 per cent of its crude oil demand. Crude oil had recently seen a crash-like situation in recent past when Brent crude oil prices dropped from the multi-year high level of over $86 a barrel to a level near $60 a barrel.

One of the reasons of plummeting crude oil prices was oversupply, recently in October this year, the United State became the largest crude oil producer. According to an ET report, the possible jittery around the supply crunch seemed to have settled after the US granted India and several other nations to keep buying Iranian oil. Meanwhile, rumours of a supply cut decision are doing rounds with regard to 175th OPEC meeting held on Thursday, December 6, 2018.

Falling crude oil price is “extremely positive for Indian economy” as this drop will translate into “savings of about $30 billion on our imports,” ET reported citing Sankaran Naren, ED and CIO, ICICI Pru Mutual Fund, adding, “most macroeconomic stress we saw in the recent past was because of high crude prices”. The Reserve Bank of India is “likely to keep the rates stable with a change in tone from hawkish to neutral/normal. It could also consider a rate cut, given the fall in crude oil prices,” Sankaran Naren was seen as saying in an ET report.

Following the sharp plunge in the crude oil prices, the Indian rupee has also registered a major recovery after the domestic currency plunged to a record low of level over 74 per unit US dollar in October this year. Since mid-November 2018, the rupee has been largely trading below 72 apiece US dollar. Meanwhile, on Friday, the rupee saw huge depreciation against the greenback, crashing as much as 44 paise to conclude at 70.90 vs USD, the Bloomberg data showed.

According to the ET report, the falling crude oil prices may not be a termed good for stock markets, as there is a positive correlation off FII (Foreign Institutional Investors) from the oil exporting countries. The decline in crude oil won’t have an excessively bad impact on FII inflows, unless crude oil prices tumble to $30-40, the report said further. “When oil goes up significantly, oil exporting nations start investing in emerging markets such as India. When oil crashes, they withdraw their money,” the report added citing Sankaran Naren.

According to Sankaran Naren as seen in the ET report, OMCs (oil marketing companies), consumer durable dependent on imported parts, automobile firms will benefit from the falling crude oil prices, while, on the other hand, domestic exporters such as IT firms may see a downside. “When rupee appreciates due to the fall in oil price, exporters such IT and pharma are likely to be impacted,” Sankaran Naren was quoted as saying in the report.

Falling crude oil price, advantage for stock market investors?Description:The tumble in crude oil prices have been well received by several experts, analysts, companies and government as lower crude oil prices will put lesser burden on India’s crude oil import bill.Times Now